What to Consider When Getting A Reverse Mortgage

To be eligible for a reverse mortgage you need to be 62 years or older, and have more than 50% equity in your home. A reverse mortgage is also known as a Home Equity Conversion Mortgage. Those aren’t the only stipulations; you will also need to prove you are financially stable to pay property taxes, upkeep, and homeowners insurance policies while attending a mandated third-party credit counseling session. Not so easy anymore right?

For a sizeable portion of older Americans, their home equity is a good representation of their wealth. They know they have this money at their disposal if they run into a major speed bump in their later years. It’s a good feeling to have once retirement grows nearer.

Be sure to consider the following:

Reverse mortgage laws require homeowners to live in and occupy the home they are taking loans out on.  So if you plan on moving to a new residence, you will need to sell the home and pay off the balance of the loan.

Are you planning on deferring your social security benefits? If yes, you can plan on getting a higher payout by waiting to collect them. Before you make a move, make sure you compare this against the interest rate you’d be paying for the reverse mortgage first, just making sure this is in your best move financially.

You may think a reverse mortgage can improve the quality of your life, and I very well could. You are allowed to use the funds as you wish; whether it is for vacation, medical bills, home renovations, or daily expenses.

If you are thinking about a reverse mortgage you best consult your financial adviser. They will tell you how this type of loan works. Do some homework yourself and figure out the pros and cons of them. You may find a new lifestyle ahead of you. 

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